The National Consumer Agency said that most insurers apply a rule that means they will only pay out for the amount listed in the insurance policy.

This means that if a homeowner only insures the contents for €40,000, that is all they will get if the contents are damaged, stolen or destroyed.

A survey of eight insurers found this was because most of them were applying the so-called "average clause".

This is a condition set by an insurer that a payment for damage or loss will be in proportion to the value insured. So, if a building worth €100,000 but insured for €50,000 is totally destroyed, the insurers will only pay €25,000.

Director at the agency Fergal O'Leary said people rarely think about making a claim when buying insurance. But it was important to consider more than just the price of a policy.

He said: "We would strongly advise consumers to take the time to ensure that the amounts provided for rebuild and contents are enough to cover any losses.

"Consumers should make a note of any valuable items and check at the quotation stage, so that they will be adequately covered." New research by the NCA found:

* Consumers can save up to €420 on the price of insurance on annual premiums by making sure to get a number of quotations before buying cover;

* The standard excess varies from €250 to €500. The excess is the first part of any insurance claim that the consumer would have to pay out of their own pocket in the event of a claim;

* All eight providers surveyed have higher excesses for water damage and subsidence claims. In all instances, the excess for water damage was at least twice that of the standard excess, ranging from €500 to €1,000;

* Generally insurers operate on a "new for old" basis by offering a payout amount to replace something that has been damaged or stolen with a new equivalent. But there are exceptions for floor coverings, clothing, and fabrics where a deduction for wear or depreciation may be applied, the NCA warned.

Mr O'Leary said too few people were switching to different providers to get better value.

He said the huge variations in premium costs meant that "many consumers may be needlessly paying more for their cover" than they need to be.

"While our market research shows that consumers who do switch find the process easy, many may find it daunting or believe the hassle outweighs the benefits," he said.

"Consumers can get a number of quotes quickly, either online, by phone or through a broker and our research shows that if they do, they can make significant savings."